Generally if you do not pass 304 Not Modified HTTP Header through your HTTP header, crawlers will fetch your whole website and then compare the content of your site with the already indexed content to check whether anything new has been updated on your website or not.
Before reading any further it's important to understand this plugin uses output buffering, fact Etag sent by this plugin is hash of the sites buffered content.
Activate the plugin through 'Plugins WordPress.
Install one of the the view HTTP headers tools in your browser.
Visit your website and then refresh the page.
On your second visit the website should return 304 not modified response...
In order to to return 304 the hash of the returned content must be the same ( IE the html must be identical between requests..
If your page or post has not been updated since the last visit, then your page will sent Not Modified Header.
On receipt of this header search engines know nothing has changed, likewise normal visitors browser will get 304 and will use the browser side cache of the page ...
Browse the code, check out SVN repository, or subscribe to the development log by RSS...
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